1. Using RVU Costing Methodology for Bundled Payment Pricing Boston Children’s Hospital Enterprise Costing Workgroup Meeting April 6, 2013 Diaa Alqusairi Mark Biscone Sarah Brooks Ginger Wilson

2. Bundled Pricing at BCH First pediatric hospital to enter into an alternative quality contract with BCBS Massachusetts Other public and private payors have approached BCH to negotiate bundled payments Global payments will likely become the predominant method of payment in Massachusetts 2

3. Results from TDABC Pilot Advantages  Potential to capture more detailed costs  Mandatory process mapping may help to identify areas for improvement Limitations  Significant initial internal investment  Uncertain return on investment (ROI)  Limited evidence of utility in large, complex environments  Lack of familiarity among payors and external stakeholders  Training and time commitment of physician organization 3

4. Assessment of Current RVU Methodology Advantages  Widely accepted by CMS and other payors  Availability of benchmark data  Currently in place at hospital Limitations  Requires routine updates  Perception that it doesn’t adequately capture care complexity  Additional investment required for physician organization 4

5. Workgroup Recommendations Expand utilization of RVU costing methodology throughout the system over a 2 year period Implement process improvement initiatives for high- cost and high-volume procedures Define, measure, and monitor patient-centric outcomes Reward providers for enhanced value 5

6. Expand Utilization of RVU Across the System Recommendation #1 Convene RVU review committee  Determine review cycle  Evaluate accuracy of RVU components Target high cost and high volume procedures  Initial Rollout: Surgery and Emergency Departments  Other departments to follow Develop enterprise communication strategy  Identify executive sponsor  Recruit physician champions  Provide regularly scheduled town hall sessions 6

7. Implement Process Improvement Initiatives Recommendation #2 Shift low-intensive procedures to less-costly locations Employ Standardized Clinical Assessment and Management Plans (SCAMPs) Utilize Lean Six Sigma for high volume, high complexity procedures  Eliminate non-value added steps in the process  Speed up cycle time and reduce wait time Redesign service from the patients’ perspective 7

8. Monitor Patient-centric Outcomes Recommendation #3 Enact standardized core outcomes  Patient satisfaction/experience scores  Cycle time reduction  Avoidable complications  Error reduction  Length of stay Organize focus groups to define additional outcomes Develop internal dashboard for metric reporting 8

9. Reward Providers for Value Recommendation #4 Incentivize providers to achieve core outcomes  Patient satisfaction/experience surveys scores  Cycle time reduction  Avoidable complications  Error reduction  Length of stay Solicit input to determine provider-specific metrics Include in annual review process 9

10. Operational Action Plan High Volume and High Cost Areas Low Volume and Low Cost Areas Phase 1 Months 0-9 Phase 2 Months 6-18 Phase 3 Months 18+ High Volume or High Cost Areas 10

11. Questions and Discussion Expand utilization of RVU costing methodology across care cycle throughout the system over 2 year period Implement process improvement initiatives for high-cost and high-volume procedures Define, measure, and monitor patient-centric outcomes Reward providers for enhanced value 11